HMRC writes to holiday let owners about the end of the furnished holiday lettings tax regime

HM Revenue and Customs may send owners of furnished holiday lets a letter, email or text message about the end of the furnished holiday lettings tax regime at any point between 11 November 2026 and 11 January 2027.

HMRC added the campaign to its published list of genuine contact on Wednesday 11 November. The same list, which Voltacle used on Tuesday to explain HMRC's letters about missing Self Assessment returns, lets people check whether a message in HMRC's name is real before acting on it.

According to HMRC, the message will outline the main areas affected, link to GOV.UK guidance on the abolition, explain what to do if the owner decides to sell or otherwise dispose of a property, and give information about Making Tax Digital.

What changed

The regime ended for Income Tax and Capital Gains Tax from 6 April 2025, and for Corporation Tax from 1 April 2025. Before then, a property that was available to let for at least 210 days a year and actually let for at least 105 got more favourable tax treatment than other property lettings. Since the change, income and gains from these properties are treated as part of the owner's ordinary property business.

For individual owners, that means:

• relief on mortgage interest and other finance costs is restricted to the basic rate of Income Tax
• capital allowances are no longer available for new spending, though existing pools can keep claiming writing-down allowances, and replacement of domestic items relief applies instead
• Business Asset Disposal Relief, rollover relief and gift relief are withdrawn
• profits no longer count as relevant UK earnings when working out how much pension tax relief someone can get

Losses from a former holiday let can now be carried forward against future profits of the wider UK or overseas property business, rather than only against the same holiday letting business.

Two transitional rules affect sellers. Where a holiday letting business stopped before the change, Business Asset Disposal Relief may still apply to a disposal within the usual three years of it ending. An anti-forestalling rule, in force from 6 March 2024, blocks the use of unconditional contracts to lock in the old capital gains reliefs.

Returns due in January

For Income Tax, 2025-26 is the first tax year without the regime. Online Self Assessment returns for that year, and any tax owed, are due by 31 January 2027.

HMRC's policy paper, using costings certified by the Office for Budget Responsibility, puts the extra tax raised by the change at £35 million in 2025-26, rising to £120 million in 2026-27 and £210 million by 2028-29.